The Secret behind Apple’s Astounding Financial Success in the Tech Market

It is no secret that Apple has experienced impressive financial success, especially with its iconic iPhone line. One such instance of this success is exemplified in the record-breaking sale of 13 million iPhone 6s and 6s Plus units within just three days of launch. But the impressive figures do not stop there; out of the American companies sitting on a whopping $1.4 trillion in cash, Apple has dominantly claimed over $200 billion as its own. Furthermore, by July 2015, Apple’s share of the smartphone industry profit soared to a staggering 92%, and by the end of 2014, Apple’s mobile operating system iOS and Android jointly controlled about 96% of the OS market. How, you may ask, does Apple manage to uphold this substantial financial lead ahead of its rivals?

In a revealing CNBC report, it was stated that,”Apple spends $236 to manufacture each iPhone 6s Plus device, which they subsequently sell for over three times its manufacturing cost at $749—a 217.4 percent markup.” This highlights Apple’s unrivaled ability to govern the premium market while other smartphone manufacturers struggle to keep afloat. However, it’s worth noting that on the international market, including regions such as Nigeria and other African countries, this price tag could surge to as high as $950.

Let’s delve into a quick breakdown of the production costs for the iPhone 6s Plus:

As Andrew Rassweiler, senior director of cost benchmarking services for IHS Technology, clearly stated in a news release, “Flash is now so cheap it’s almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step-up in memory capacity.” He further explains that, “For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory. This is part of Apple’s ongoing strategy to improve profits by selling a product mix that is heavier in the higher-end iPhones.”

Therefore, it seems that Apple’s robust marketing strategy and diverse range of services have helped set the company apart from its competitors. Despite Samsung having sold more phone units than Apple in the first quarter of a given year, Apple’s profit tallies continued to overshadow Samsung’s. While the cost breakdown above may provide some insight, the reality could also pivot around quality, durability of the products, and the exclusive app services offered by Apple.